Amid growing calls for transparency and social and environmental responsibility, companies are employing different strategies to improve consumer perceptions of their brands. Some pursue internal initiatives that reduce their negative social or environmental impacts through responsible operations practices (such as paying a living wage to workers or engaging in environmentally sustainable manufacturing). Others pursue external responsibility initiatives (such as philanthropy or cause-related marketing). Through two experiments conducted in the field and complementary online experiments, we compare how transparency into these internal and external initiatives affects customer perceptions and sales. We find that transparency into both internal and external responsibility initiatives tends to dominate generic brand marketing in motivating consumer purchases, supporting the view that consumers take companies' responsibility efforts into account in their decision making. Furthermore, the results provide converging evidence that transparency into a company's internal responsibility practices can be at least as motivating of consumer sales as transparency into its external responsibility initiatives, incrementally increasing a consumer's probability of purchase by 6.40% and 45.85% across our two field experiments, conducted in social and environmental domains, respectively. Our results suggest that it may be in the interest of both business and society for managers to prioritize internal responsible operations initiatives to achieve both top- and bottom-line benefits while mitigating social and environmental harms.
Başak Kalkanci is an associate professor of operations management at the Scheller College of Business at Georgia Tech. Her research focuses on socially and environmentally responsible supply chain management, and contracting and the role of information in decentralized supply chains. Her research aims to lay the necessary groundwork to enable real-time measurement and management of social and environmental impacts in global supply chains. She earned her Ph.D in Management Science and Engineering from Stanford University in 2010 and her B.S. in Industrial Engineering from Bogazici University in 2004. She was a postdoctoral associate at the Massachusetts Institute of Technology from 2011 to 2013. Her work appeared in premier journals including Management Science, Operations Research, Manufacturing & Service Operations Management, and Production and Operations Management. She is the recipient of the Paul Kleindorfer Award in Sustainability (2020), Alliance for Research on Corporate Sustainability Emerging Sustainability Scholar Award (2019), Georgia Power Professor of Excellence (2015), Management Science Meritorious Service Award (2015, 2017, 2019, 2020), and M&SOM Meritorious Service Award (2014).
Date: Friday, December 11, 2020
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